Credit for research activities made permanent; increased credit for businesses manufacturing in the united states; credit made refundable for small businesses

(a)

Research credit made permanent

(1)

In general

Section 41 of the Internal Revenue Code of 1986 is amended by striking subsection (h). (2)

Conforming amendments

(A)Subsection (c) of section 41 of such Code is amended by striking paragraph (4). (B)Paragraph (1) of section 45C(b) of such Code is amended by striking subparagraph (D). (3)

Effective date

The amendments made by this subsection shall apply to amounts paid or incurred after December 31, 2011. (b)

Enhanced research credit for domestic manufacturers

(1)

In general

Section 41 of such Code, as amended by subsection (a), is amended by inserting after subsection (g) the following new subsection:

(h)

Enhanced credit for domestic manufacturers

(1)

In general

In the case of a qualified domestic manufacturer, this section shall be applied by increasing the 20 percent amount in subsection (a)(1) by the bonus amount. (2)

Qualified domestic manufacturer

For purposes of this subsection— (A)

In general

The term qualified domestic manufacturer means any taxpayer who has a domestic production percentage of more than 50 percent. (B)

Domestic production percentage

The term domestic production percentage means, with respect to any taxable year, the percentage determined by dividing— (i)the taxpayer’s domestic production gross receipts (as defined in paragraph (4) of section 199(c)) for such taxable year, by (ii)the amount which would be determined under such paragraph with respect to the taxpayer for such taxable year if the activities described in such paragraph were taken into account without regard to whether they occurred in the United States. (3)

Bonus amount

For purposes of paragraph (1), the bonus amount shall be determined as follows: If the domestic production The bonus percentage is: amount is: More than 50 percent but not more than 60 percent 2 percentage points More than 60 percent but not more than 70 percent 4 percentage points More than 70 percent but not more than 80 percent 6 percentage points More than 80 percent but not more than 90 percent 8 percentage points More than 90 percent10 percentage points

(2)

Effective date

The amendment made by this section shall apply to expenditures paid or incurred in taxable years beginning after December 31, 2011. (c)

Credit made refundable for small businesses

(1)

In general

Section 41 of such Code is amended by adding at the end the following new subsection:

(i)

Credit refundable for small businesses

(1)

In general

In the case of a small business (as defined in subsection (b)(3)(D)(iii)), 100 percent of the credit determined under this section shall be treated as a credit allowable under subpart C (and not allowable under this subpart). (2)

Businesses with more than 500 employees but less than 800 employees

If any person (not otherwise a small business (as so defined)) would be treated as such a small business if less than 800 were substituted for 500 or fewer in subsection (b)(3)(D)(iii), such person shall be treated as a small business for purposes of this subsection but the applicable percentage determined in accordance with the following table shall be substituted for 100 percent in paragraph (1). If the annual number ofThe applicable employees is:percentage is: More than 500 but not more than 60080 More than 600 but not more than 70060 More than 700 but not more than 80040

(2)

Effective date

The amendment made by this subsection shall apply to taxable years beginning after December 31, 2011.